Nest pension and alternatives

flopsy1973

My partner is enrolled in nest with work with approx 44k but pays in additional 600 per month to it. We are aware of the 1.8 charge on contributions and I read some comments how poor the nest scheme is, but why?

Is is worth her starting a new sip she also has a old workplace TPP scheme would that be a better scheme to divert the extra monthly payments to ?

jones_guitar

It depends what funds you have been paying into also. 1.8 isn't so bad for a good fund. But, if the fund does not perform that well, then, yes, it is poorer.

Say a fund that is part bonds and part stocks increases by 4 percent each year. Minus 1.8 percent is only 2.2 for the first year. Inflation currently higher, so, every initial year you might potentially lose money.

Pulling out also requires thought. It depends on the fund and if it has exposure to the stock market, I'd leave it and stop paying the extra in perhaps.

If someone keeps pulling in and out of a stock market, they can also lose money. The fund can be sold on a down day, and purchased on an up day - that can be several hundred pounds.

Albermarle

NEST has this high contribution charge ( although partly compensated by a reasonably low ongoing charges) and only a limited selection of investments ( 10?) . I think also their withdrawal options are less than some other providers. So 'poor' is maybe a strong word, but not the best might be more accurate.

For sure having a separate pension for additional contributions is an option, but you would have to check the old pension for charges and investment choice, or if did open a SIPP you would also have to think about what they would want to invest in as charging structures can be quite complex.

wjr4

Is she paying the additional money in via salary sacrifice?

dunstonh

My partner is enrolled in nest with work with approx 44k but pays in additional 600 per month to it. We are aware of the 1.8 charge on contributions and I read some comments how poor the nest scheme is, but why?

Its investment selection is weak, and what they have hasn't had strong growth during the last 3 years of strong growth relative to other basic options available on the marketplace (i.e., trackers or multi-asset funds with underlying passives).

They are one of only a handful of providers that have initial charges.

For a while, its annual charge appeared low cost and that somewhat made up for the initial charge if you were young enough to breakeven. However, circa 0.3x% p.a. is now increasingly the ballpark for basic options.

Nest originally came about because the Government had a fear that insurance companies and providers wouldn't cater for the bottom end of the market. So, they introduced Nest to cater for that bottom end, and the product reflects that. As it happens, the private sector did cater for the bottom end with a small number of companies like Now, Smart and Peoples Partnership filling in. Nest wasn't actually necessary in the end.

Is is worth her starting a new sip she also has a old workplace TPP scheme would that be a better scheme to divert the extra monthly payments to ?

The old workplace pension may not be available for increments once you leave employment. Also, we don't know what type of scheme it is and on what basis or what investments it has available. TPP could stand for a number of things.

daveyjp

From recent experience Nest is also well behind the times in how they deal with customers. They wanted everything in writing by post.

jones_guitar

Also, you might be speaking from an investment point of view. I would never put extra money into Nest. As it does not have the funds I like.

LHW99

On the plus side, if NEST is the current workplace scheme, the employer will also be paying in. It's unlikely that they will add more than the legal amount, but it's worth checking if they would increase their contribution if she does.

Otherwise, starting a SIPP or personal pension of her own will do no harm, and if she goes to a new employer in future with a different / better scheme, they could probably both be transferred in.

penners324

https://forums.moneysavingexpert.com/discussion/comment/81949908#Comment_81949908

2 of their funds have performed pretty well. The Sharia fund specifically

penners324

TThey Need to find out if contributions are salary sacrifice or one of the other 2 alternatives.

Also ensure they have a login for Nest

QrizB

The Sharia fund specifically.

That's a bet on US tech stocks and has gone pretty much nowhere in the past 6 months.